Madrange SA

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Madrange SA

BP138
Limoges
F-87004 Cedex
France
Telephone: (33) 5 55 30 55 41
Fax: (33) 5 55 31 33 00
Web site: http://www.madrange.com

Private Company
Incorporated: 1924
Employees: 1,000
Sales: EUR 584 million ($584 million)(2002)
NAIC: 311612 Meat Processed From Carcasses

Madrange SA is Europe’s leading producer of cooked hams and other deli meats. Based near Limoges, France, the privately owned company produces European market-leading deli hams (13 percent of European market), prepackaged ham (16 percent), prepackaged patés (25 percent), and chorizo (25 percent). The company also produces a variety of other products, including salamis, bacon, cured sausages, and chicken and turkey breasts. Madrange owes its market dominance in part to its strong production of private-label deli meats, cured sausages, and patés for supermarket and hypermarket groups. In addition, the company has built a strong reputation for its higher-market Madrange-branded products. The company began producing own-label products after its acquisitions of GEO, which produces the high-end Le Baron ham brand; Fontaine de Savoie; and Robert Antoine. The latter two brands, acquired in 2000, have been grouped under a new subsidiary, La Maison du Jambón, created in December 2002. Family-owned Madrange remains under the leadership of its founder’s grandson—and chief architect of the group’s growth—Jean Madrangeas. In 2002, the company posted sales of EUR 584 million.

Artisan Origins in the 1920s

Ham had long been a mainstay of the French diet—and a proud culinary tradition—when Baptiste Latronche opened his butcher and deli shop in the village of Corèze, near Limoges. Like many of his counterparts, Latronche developed his own recipes for cured meats, including hams. Latronche’s daughter, Andrée, joined her father in the shop and later took over the business, joined by husband Rene Madrangeas.

The Madrangeas’s continued to develop their ham recipe in the years following World War I. While many ham producers during this period had begun to adopt new curing and production techniques—including the addition of polyphosphates, which produced hams that retained more water and were consequently larger—the Madrangeas’s decided to maintain high quality standards for their own products.

Demand for the Madrangeas’s hams grew, and by the mid-1960s the family decided to build a dedicated production facility in order to produce hams on a larger scale. In 1966, the Madrangeas borrowed some $70,000 and installed their first industrialized plant in nearby Limoges, founding Madrange SA.

Madrange’s growth remained modest over the following decades, as the company avoided further external financing, choosing to fund its own growth instead. In the late 1970s, the company began branching out from its core ham production and in 1978 added a second plant, also in the Limoges area, for the production of cooked sausages and patés. By the beginning of the 1980s, the company’s turnover had topped the equivalent of $30 million.

The company’s rising sales led it to replace its original production site with a new plant. That facility, at the time one of the most modern production plants for deli cooked hams in Europe, was opened in 1986. With its increased production capacity, Madrange now began planning its first television advertising campaign.

That effort was led by Jean Madrangeas, who had joined the family concern after completing a degree in management. The younger Madrangeas started out working at the company’s factory before moving on to a marketing position, where he became responsible for launching Madrange’s highly successful “Star Strategy” advertising campaign in 1987. Featuring well-known French television actors, the television advertisements instantly boosted Madrange’s visibility to a national level.

Private-Label Growth in the 1990s

The success of the advertising campaign led the company to develop a new product line—that of prepackaged cooked ham under the Madrange brand name. Launched in 1988, the new line gave the company its latest success and helped boost its sales to nearly $100 million by 1990. The company also began its first efforts to introduce the Madrange brand name internationally, including in the United States.

Jean Madrangeas took over as company CEO in 1989 and prepared it for still greater growth. By then, the French grocery market had undergone a revolution, rapidly shifting from small shops to self-service supermarkets and especially to huge department-store like “hypermarkets.” The domination of the French retail scene by a relatively small number of large-scale distribution groups also transformed the supplier market as well, especially with the introduction of the first retailer-owned private-label brands.

Madrange became the first of France’s branded ham producers to enter the private-label market. As Jean Madrangeas explained to Capital: “I bet that with small margins and large volumes, there would be enough to pay our fixed costs.” Madrange quickly attracted its first clients and soon became the primary provider of hams and other deli products to the country’s leading retailers.

In order to meet demand, the company installed new production lines. But Madrange’s traditional commitment to quality also led it to take the unusual step of installing clean rooms in its production facility in 1992. The company adopted extremely strict hygiene standards that far surpassed both industry guidelines and of European Community requirements. Madrange also invested heavily in technology, developing much of its own automated production equipment, including slicing machinery equipped with ultrasound capability as well as bacteria sensors. The latter enabled the company to claim a zero-bacteria count for its prepackaged products.

In 1994, Madrange expanded its line of products with the launch of prepackaged patés and continued to develop other new deli products. The company’s sales continued to grow, reaching FFr1.6 million (approximately $266 million) by 1996, and its steady investments at its production plants had earned it ISO 9002 certification, awarded in 1995. In that year, the company turned to outside investors for the first time, selling 10 percent of its shares to private equity investment group Siparex.

That investment enabled Madrange to revamp its main Li-moges-Feytiat site, adding new and further modernized production capabilities. This expansion came in part with the company’s determination to step up its international sales. As part of that push, Madrange created its first foreign subsidiary, Madrange of North America, based in New Jersey, in 1999. In 2000, the company set up a subsidiary in the United Kingdom as well. Also in that year, the company’s Star Strategy advertising campaign began to feature Spanish actress Victoria Abril and continued to prove successful.

European Leader in the 2000s

Having built its ham empire on the foundation of private-label sales during the 1990s, Madrange now sought to develop sales of its higher-margin brand, which was typically priced some 20 percent more than its nearly identical private-label products. As part of that strategy, Madrange drafted a new advertising campaign, now focused on the products themselves, which was launched in 2001.

Madrange had also launched a new external growth drive, in part to keep up with the rapid consolidation of the European retail market. In 2000, the company made its first two acquisitions, acquiring two specialists in high-end, air-dried hams—Robert Antoine and Fontaine de Savoie.

Like Madrange, Fontaine had started out as a small, family-owned shop in the Savoy region of the French Alps. Fontaine incorporated in 1964 and began industrial production of its Savoy region ham and sausage specialties, building a 1,600-square-meter plant in 1970. Over the next two decades, Fontaine continued to expand its production capacity, adding a dedicated dry sausage facility in 1982 and a new ham production unit in 1989. In 1997, Fontaine acquired fellow Savoy cured meats producer Guerraz, yet remained a modest business, with sales of just EUR 15 million at the time of its acquisition by Madrange.

Robert Antoine began as a deli shop, in Laucaune, in France’s Tarn region. In 1976, Antoine decided to move into industrial production and built his first factory. At first a regional company, the growing success of its hams forced it to expand production in the early 1980s, tripling its production area. Toward the end of the 1980s, Antoine began automating its operations, adding automated salting equipment and, in 1989, automatic slicing machinery. The installation of this latter technology enabled the company to begin selling prepackaged, sliced hams, notably through the country’s supermarket and hypermarket sectors. In 1990, the company acquired a new, 5,000-square-meter facility, which became its central production base. By the middle of the decade, Robert Antoine had grown to become France’s number three air-dried ham specialist.

The additions of Robert Antoine and Fontaine de Savoie gave Madrange a leading position in the dried ham market and helped boost it closer to its goal: that of European leadership in the cured meats segment. In April 2001, Madrange had achieved its goal when it acquired longtime rival GEO, which marketed under the high-end Le Baron label.

Company Perspectives

Madrange’s mission is to contribute actively to the development and differentiation of the deli meats market and provide the best service to consumers.

GEO had its origins in Paris, when Georges Foucault began marking his hams under that name in 1912. By 1920, the brand’s popularity enabled the company to add new production facilities. Foucault then expanded production to include preserves. In the mid-1950s, GEO became one of the first companies to offer prepackaged sliced meats. In 1970, the company built a new production plant in the town of Morlaix, launching a new line of chorizo sausage products. The rise of the large retail groups encouraged GEO to switch its focus entirely to prepackaged meats in the mid-1980s, leading to the launch of a new high-end brand, Le Baron.

GEO, which had restructured under a holding company, Cofigeo, in the mid-1980s, prepared its own entry into the private-label market with the acquisition of Imbert in 1991. That company was subsequently merged into GEO. In the mid-1990s, GEO expanded its production, building a new factory in Ablis. At 20,000 square meters, the factory added a capacity of 25,000 tons per year.

With GEO added to its operations, Madrange captured the number one spot in the European cooked meats segment. The company’s sales were also boosted by some EUR 85 million, and by the end of 2002 had reached EUR 584 million. In December of that year, Madrange created a new subsidiary, La Maison du Jambón, grouping its salted meats production, including Robert Antoine and Fontaine de Savoie, and preparing the way for new acquisitions, not only in France but in Italy and Spain as well. The company also expected to step up its penetration of the British market, particularly with the launch of new, UK-specific recipes in 2003. Madrange had grown from a single shop in the 1920s to an industry leader in the new century.

Principal Subsidiaries

GEO SA; La Maison du Jambon; Madrange North America Inc. (United States).

Principal Competitors

Doux S.A.; Cooperative des Eleveurs de la Region de Lamballe; Cooperative Laitière Even; Groupe Alliance; Société Vitreenne d’Abattage; Fleury Michon S.A.; Bernard S.A.

Key Dates

1924:: Baptiste Latronche opens a butcher shop in Corèze, near Limoges, France.
1966:: Latronche’s daughter Andrée and her husband Jean Madrangeas install the first production plant in Limoges.
1978:: A second plant is opened for the production of sausages and patés.
1986:: The original production plant is replaced with a new, modern facility.
1989:: The company launches prepackaged meat products and begins supplying private label meats.
1999:: The company’s first international subsidiary, Madrange of North America, is created in the United States.
2000:: A UK subsidiary is created; the company acquires Robert Antoine and Fontaine de Savoie.
2001:: Madrange acquires GEO and its brand, Le Baron.
2002:: A new subsidiary, La Maison du Jambon, is created to produce salted meats.